How much will you have saved for retirement

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Reference no: EM131883381

Answer & please show work.

1. You are 25 years old and decide to start saving for your retirement. You plan to save $5,000 at the end of each year (so the first deposit will be one year from now), and you will make the last deposit when you are a 55. Suppose you earn 8% per year on your retirement savings.

a. How much will you have saved for retirement?

b. How much will you have saved if you wait until age 35 to start saving (again, with your first deposit at the end of the year).

2. Ebertek is a privately held corporation that is currently being offered for sale. Big Corp. is considering buying the firm. Ebertek's earnings after tax have averaged $2.5 million for the last five years without much variation. Interest rates are about 10%. What is a realistic starting point for price negotiations?

3. A bank is offering 12% compounded quarterly. If you put $10 in an account a. How much will you have at the end of one year? b. How much is the effective annual rate?

Reference no: EM131883381

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